Dave Woodson

When an Indiana homeowner sells his home and decides to buy a new one, there are really just 3 basic options for the residence -- sell, keep or rent.

Unfortunately, no matter which path is chosen,the Indiana move-up homebuyer will be in need of a home loan and they will find that qualifying for this home loan to be a little more difficult this year than in the past.

The guidelines are getting tighter for thos homeownser that will be "carrying two mortgages".

Here are some of the changes this spring's Indiana buyers face:

When selling the primary residence:

If you turn your home into a second home:

If you want to convert your into an investment property:

To Read the whole blog head on on over the Mad Mortgage Machine at New Regs for the Indiana Moving on up Buyer

I have a video posted there as well.

Dave Woodson

(219)872-8000

After a weak holiday shopping season, annual retail sales declined in 2008.  I know we did a smaller Christmas in our family and extended family

It is the first time annual Retail Sales declined since the government started tracking the data some 40-odd years ago.

It also gives nod to the notion that the U.S. economy is suffering through a deeper recession than I previously ever thought.  There was a large pullback in spending, especially in December which is the heaviest shopping month, this highlights just how cautious and tentative the nature of the American shopper.

I find it strange though that all of this may end up being good news for Spring Indiana home buyer.

The Retail Sales are so reflective of consumer spending, that a dramatic pullback helps to keep the economy in low gear, helping to counter act the inflationary impact of the government stimulus and direct intervention.  Don’t you wish you could get some bailout dollars.  And, I will remind you again that inflation, causes mortgage rates to rise.  And, when it is gone it helps to keep mortgage rates low.
I have not seen this low in a couple of years.

Keep in mind that it is earnings season on Wall Street and weak corporate return has spurred a 6-day retreat on the Dow.  As I have said more than a few times, as dollars leave the stock market, investors tend to put them in the safer world of bonds and mortgage backed securities, which further pushes rates down.

I really do think we are going to hit that magic 4.5% in the next couple of days or weeks.

Economic weakness, believe it or not, can be what we need to spur on the sales of new homes in the form reduced rates.  For active Indiana home buyers or those entering the market for a new home this Spring.

The timing may be just right.

For More Information (219)872-8000

I have often touted the benefit of Indiana home ownership is the tax benefits. Now, I am not a tax professional. Please consult a local tax professional.

Since, the IRS makes it difficult to understand how the benefits actually work.

Indiana Homeowners have two related tax deductions:
1. annual mortgage interest paid
2. estate tax bills paid

However, not every home owner is eligible. There are some exclusion that include amount borrowed, and whether or the home is a main residence or 2nd home. Which is very popular along the Indiana Shoreline.

The IRS publication is filled with notes and explanations (that you need a law degree to understand), but you can calculate your approximate mortgage interest tax deduction using the following math:

1. add your annual mortgage interest and real estate taxes paid (easier said than done with all of the changes)
2. find your tax rate on the IRS tax bracket schedule, that is not an eye chart
3. multiple your tax rate by the sum added from Step 1

This is overly watered down, but still fairly accurate.

A good example, an Indiana homeowner paying a combined $20,000 in mortgage interest and real estate taxes in 2008, and who falls in the 28% tax bracket, may be due $5,600 in tax credits.

The availability of mortgage interest tax deductions is one reason why I make the reference to “after-tax mortgage rates”. An after-tax mortgage rate is effective interest rate, post-tax code, and can be calculated using the formula below:

(After-Tax Mortgage Rate) = (Mortgage Rate) * (1 - Marginal Tax Rate)

The same homeowner with a 5% mortgage rate, therefore, has an after-tax mortgage rate of 3.6%. Yes, Indiana home buyers it is possible to get a 5% interest rate.

Like I said before, I am not an Accountant or a Tax attorney. Please consult your personal accountant or give me a call. I am can refer you a few in NorthWest Indiana if you would like. Because, not every Indiana Homeowner is eligible.

In the first full week of 2009 the mortgage backed bond market have traded back-and-forth in a seemingly never ending tug of war and eventually closed the week improved overall.

The weekly mortgage rates have fallen for the first time since mid-December.

The big news of last week was the Friday’s jobs report, and according to governmental press release: the economy shed another 524,000 jobs in December, raising the total job losses for 2008 to 2.065 million.

Making it the largest annual job loss since 1945, and the press reminds us everyday. What they do not tell you is that we had 52 months of positive growth of jobs, and for one more reason to look beyond the headlines, today’s workforce is three times as large.

There was some Other important news that were included the Fed’s minutes from its 2-day gab fest/kegger in December. The FedRes indicated that inflation should remain low through early-2010, some good news for Indiana home buyers and Indiana homeowners since inflation is linked to mortgage rates. Lower inflation equals lower rates.

So this week, the market-moving data won’t start until mid-week, but with a fair number of Fed “chatty Cathy’s” making some appearances this, a case of “loose lips” can lead to mortgage rate jump. There will be a Big Ben appearance in London today and we are not talking clock. There will be 10 speeches in all for the week. Can you say roller coaster.

Really, despite the barrage of negative econ news, mortgage rates remain low. so, if you are looking to buy or refi, call your friendly neighborhood loan officer or the Mad Mortgage Machine to see if your home loan is eligible.

Last year and at the start of this year there were a lot of changes in the mortgage industry.  New rules, new regulations and so on.  It is taking a lot of people by surprise.   I know cause of the calls coming into me this week for people were wanting to be pre-approved to buy a new Indiana house and they have no money down and no one to give them a gift of down payment of 3.5% of the purchase price.

Two of them told me that were waiting for tax refunds or big bonus checks.  Which in it’s self is fine, but what about rainy day issues.  We thank God that we have a rainy day account and everyone should.   I want to thank Missy Caullk for giving me this idea for NW Indiana Home buyers and if you are ever in need of moving to Ann arbor and be near the Wolverines give Missy a call.

Einstein, I have heard once said, “the most powerful force in the universe is compound interest”, and he is right.  Your money in the right form will grow for you over time and every day it will grow more.  Take a look at this graph and what two thousand dollars will do for a 19 year old.

Just think if you started at the birth of a child and when they are out of college the gift of a down payment could the best think you ever did for them.  Or, now as an adult, you can go after certain investment vehicles that will allow you to grow your money pretty quickly.  (I am not an investment advisor and I do not play on TV) If you would a referral for an Indiana Financial Advisor please let me know and I can certainly help you with that.

But watch this quick movie from CustomCraft it is a great learning tool to save money.